Deletion or mutation of the retinoblastoma tumor suppressor (Rb) is an important step leading to retinoblastomas and several other tumors such as small cell lung cancer. We are interested in the mechanism of action of Rb in normal cells, and whether it functions in lung differentiation. The pattern of Rb is restricted during development: high levels are only seen in several tissues such as skeletal muscle, central nervous system, and lung. A role for Rb has been demonstrated in myogenesis and neurogenesis- it suppresses cell growth as a prerequisite to terminal differentiation- and its pattern in the lung implies a role in the differentiation of lung epithelium. We present evidence of such a role in cultured airway epithelial cells. Studies in transgenic mice are proposed to investigate the role of Rb in lung epithelial differentiation by altering the level of active Rb in developing lung epithelium in vivo. We have also focused on the molecular mechanism of how Rb functions in normal cells. One target of Rb in the cell is the E2F family of transcription factors. These proteins regulate cell cycle gene expression. We have shown that Rb is a repressor that not only inactivates E2Fs, but when brought to the promoter through interaction with E2Fs, it is a general block to transcription. Such transcriptional inhibition prevents expression of cell cycle genes leading to growth suppression. Binding of Rb to E2Fs is controlled by phosphorylation of Rb during the cell cycle. This results in the periodic interaction of Rb with E2Fs causing E2F sites to alternate between enhancers and silencers during the cell cycle. We have fused Rb to the DNA binding domain of the yeast transcription factor Gal4 so that it can be brought to the promoter in an E2F- independent fashion. Using such constructs in transfection assays, we have demonstrated that Rb has intrinsic transcriptional repressor activity which is independent of its association with E2Fs, and we have localized the area required for repression to the so called pocket region of Rb. Two conserved domains, A and B, within the pocket are required for repressor activity. We show that the two domains bind each other, and propose that this binding facilitates formation of the active pocket in Rb. Rb also binds to other transcription factors; however, we only observe transcriptional repression when E2F sites are present in the promoter. What then is the significance of Rb binding to these other transcription factors? The affinity of Rb for E2Fs appears higher than for other factors that we have examined, and we present evidence that binding of Rb to E2Fs is a high affinity interaction that selectively targets Rb to the proper set of promoters, and that once concentrated at the promoter, Rb blocks transcription by binding to other transcription factors and preventing their interaction with the basal transcription complex. We propose experiments to further examine the mechanism of how Rb represses transcription, and to determine whether its activity is important in differentiation of the lung.